Overnight Greek Proposals Reignites European Stock Markets

Worldwide markets showed a sign of relief as new proposals put forth by Greek Prime Minister Alexis Tsipras early on Monday were welcomed by creditors and EU officials. While no specific details were announced, Greece’s creditors described it as a “good basis for progress” in upcoming negotiations. As the June 30 deadline draws nearer, concerns that Greece would default on its loans and leave the currency bloc have been mounting. The Greek government has not been willing to cut anymore pensions or wages, leading some to believe that the new offer proposes alternate taxes. Despite last week’s failed negotiations, the latest development has sparked a hope that agreement could be reached in due time. European stock markets reacted instantly, displaying impressive gains as trading began early on Monday. As of this writing, the UK’s FTSE rose 71.44 points (1.05%) and is currently trading at 6,781.41. The French CAC rose 108.87 points (2.26%) and is currently trading at 4,924.44. The German DAX , perhaps due to Germany’s heavy involvement in providing Greece with bailouts, has shown the strongest gains, adding 26339 points (2.4%) to trade at 11,300.87.


U.S. shares ended lower on Friday as the Dow Jones, NASDAQ and S&P 500 all lose around half a percent. Despite these declines, the Dow Jones and S&P 500 have risen for the second consecutive week overall. Gains this week were fueled by news from the Federal Reserve that hinted that an interest rate hike will likely be a gradual process, indicating that it would be spread out across a period of time. Recent economic data has suggested that the U.S. economy is improving, albeit at a slower pace, adding credence to the Fed’s position. The Federal Reserve’s cautious position regarding interest rates also ignited gold's biggest rally in the last month. This sparked a renewed interest in the precious metal with nearly $900 million added to the value of exchange-traded products backed by the metal. Higher interest rates curb the interest in gold because the commodity doesn’t return interest like bonds or equities. However, the gradual nature of the interest rate hike reaffirmed gold’s appeal.


Upcoming economic events this week include U.S. existing home sales later today, followed by Eurozone consumer confidence data. On Tuesday, Eurozone manufacturing data will be released early in the session followed by U.S. Durable Goods orders which estimate the change in ordering in the manufacturing sector.